A business model to save the black rhino?


Kenya Wildlife Service (KWS) wardens insert a transmitter on a tranquilized male black rhinoceros in Kenya's Rift Valley, in this 2010 file photo. (THOMAS MUKOYA/REUTERS)
March 15, 2013

The big idea: Can a for-profit big-game farm in South Africa be the answer to saving the endangered African black rhino?

The scenario: In 2011, the black rhino was close to extinction. Poaching rhino for the black-market sale of their horns was the primary cause of a precipitous population decline. At the time, rhino horns could command up to $60,000 a kilogram on the black market.

The presence of the black rhino created economic value for local communities via the hunting and eco-tourism industries in South Africa, making its impending extinction more devastating. Big-game farmer and businessman John Hume recognized the rhino’s value when he opened Mauricedale Game Ranch, a privately owned, for-profit farm in northeastern South Africa. Hume decided to use his land holdings as a game ranch and began stocking it with buffalo, antelope, hippopotamuses, giraffes, zebras, ostriches and white and black rhino.

Although controversial, Hume’s management and utilization of the rhino via breeding, limited sport hunting and horn harvesting have resulted in significant population gains, making Hume the largest private rhino owner in the world. He became an unintentional advocate for the rhino and a primary stakeholder in the rhino preservation effort, along with governmental and third-party organizations.

However, complex international regulations and economic challenges threatened the long-term profitability of his enterprise. Hume believed that it would neither achieve full market potential nor become a replicable model until the global rhino horn trade was legalized. Additionally, regulations in South Africa historically set a sustainable hunting quota of five “surplus male” black rhino per year, limiting hunting licenses and the corresponding income available from black rhino hunting at Mauricedale. According to Hume, the permitting process could stifle the ranch’s long-term growth.

Hume’s detractors argue that he is motivated purely by financial gain, but he contends that profits are necessary to reinvest in breeding more rhino. An advocate of monetary incentives, Hume said, “All conservation efforts need funding, and what better way to motivate the private farmer to breed rhino than to afford him the opportunity to be viable?”

The resolution: At the heart of the Mauricedale business philosophy was Hume’s belief in “sustainable utilization.” Because rhino had long been poached for their valuable horns, Hume said, the dual creation of legalized markets for both rhino hunting and the sale of rhino horn were necessary to enable the species’ recovery.

Hume said that the dehorning process has protected his rhino stock from poachers. Hume has accumulated a stockpile of rhino horns registered with the provincial government and micro-chipped for security purposes.

The horn trade’s global legalization would make raising rhino on private property economically viable and poaching much more difficult, he said.

The lesson: Hume believes his business model is the best way to stop the black rhino’s extinction. By using economic incentives to convince poor African communities that they can make money by breeding rhino than by poaching them, Hume has presented a way to help save the black rhino, make money and supply a resource that is in demand.

— Jared Harris and R. Edward Freeman

Harris and Freeman are professors at the University of Virginia’s Darden School of Business. This case was prepared by Trisha Bailey and Sierra Cook, Darden School of Business MBA 2011 students, and Jenny Mead, senior researcher at Darden’s Olsson Center for Applied Ethics.

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